The terms behind
the conversation.
Understand common business and investment-property financing terms, then follow the links for examples and practical questions to ask.
- After-repair value (ARV)
An estimate of what a property may be worth after a specified renovation is complete. It is a valuation assumption, not a guaranteed sale price.
Explore the related guide- Amortization
The schedule by which payments reduce loan principal over time. An amortization period may be longer than the loan’s maturity, leaving a balloon payment.
Explore the related guide- Balloon payment
A remaining principal balance due at maturity when regular payments have not fully repaid the loan. An expected refinance is not a guaranteed source of repayment.
Explore the related guide- Bridge financing
Shorter-term financing intended to bridge a transition, such as acquisition and renovation before a sale or eligible long-term refinance.
Explore the related guide- Cash-out refinance
A new loan that replaces existing financing and may provide cash after payoff amounts, closing costs, and other required deductions.
Explore the related guide- Collateral
Assets pledged to secure a financing obligation. A lender’s rights depend on the agreement and applicable law.
Explore the related guide- Combined loan-to-value (CLTV)
Combined mortgage balances or exposure, as defined by the program, divided by the accepted property value. Ask how an undrawn credit line is treated.
Explore the related guide- Contingency reserve
Money set aside for uncertain project costs or overruns. It should be considered alongside liquidity for loan payments, operating expenses, and draw timing.
Explore the related guide- Debt service
The loan payments counted in an underwriting calculation. A rental program may use principal, interest, taxes, insurance, and association dues; another program may use a different definition.
Explore the related guide- Debt service coverage ratio (DSCR)
Qualifying cash flow divided by the debt service defined by the program. Residential investor and commercial-property calculations can use different income and expense measures.
Explore the related guide- Draw
An advance of funds under a loan or credit facility. Construction and rehabilitation draws may require documented work, inspection, and approval before funds are released.
Explore the related guide- Draw period
The time during which an eligible borrower may request advances under a credit line, subject to the agreement. Repayment terms can change when this period ends.
Explore the related guide- Exit strategy
A planned way to repay a project or short-term loan, such as selling or refinancing. The plan should include a realistic alternative if timing or qualification changes.
Explore the related guide- Fixed second mortgage
A separate loan secured behind an existing first mortgage. A fixed-rate structure typically advances a defined amount rather than offering a revolving draw facility.
Explore the related guide- HELOC
A home equity line of credit secured by eligible real estate. Availability for an investment property and permitted uses depend on the program and property.
Explore the related guide- Lien position
The relative priority of a claim against collateral. Priority, existing obligations, and required consents can affect whether a new loan can be secured.
Explore the related guide- Loan-to-cost (LTC)
Loan amount divided by the project costs recognized by the lender. Ask which acquisition, improvement, and other costs count in both the numerator and denominator.
Explore the related guide- Loan-to-value (LTV)
Loan amount divided by the property value accepted for the relevant calculation. The value may be current, purchase-related, or based on completion depending on the program.
Explore the related guide- Net operating income (NOI)
Property operating income after recognized operating expenses and before debt service. Lenders may adjust reported amounts, so underwriting NOI can differ from bookkeeping income.
Explore the related guide- Personal guarantee
An individual’s contractual promise relating to repayment of a business obligation. Its scope and any limitations must be read in the actual agreement.
Explore the related guide- Prepayment provision
Contract terms governing repayment before scheduled maturity, including any charge, minimum-interest requirement, or release condition.
Explore the related guide- Rent roll
A property schedule identifying units or spaces, lease terms, rents, and occupancy. It should reconcile with the supporting leases and operating records.
Explore the related guide- Revolving credit
A facility that may allow borrowing, repayment, and borrowing again within an available limit and agreed term. Access remains subject to its conditions.
Explore the related guide- Working capital
Resources used to support day-to-day business operations. A financing request should identify the cash-flow gap, its timing, and the expected repayment source.
Explore the related guide
Definitions are educational summaries. Loan agreements and program-specific underwriting definitions govern a transaction. Published by The Mortgage Calculator, NMLS #2377459, on November 11, 2026.